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Background Checks: Best Practices and Reducing Risks
When Hiring
MANESH K. RATH
KELLER AND HECKMAN LLP
Copyright Keller and Heckman LLP © 2011
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Meet Our Speaker
MANESH K. RATH KELLER AND HECKMAN LLP 1001 G Street, NW, Ste. 500W Washington, D.C. 20001 (202) 434-4182 [email protected]
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Outline
I. Risks of Not Performing Background Checks II. Types Of Background Checks III. Disclosure and Release IV. Limitations On Utility Of Background Data V. Lawsuit Risks For Performing Background Checks VI. Bill: Equal Employment For All Act (HR 3149) VII. State Legislative Activity
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Risks of Not Performing Background Checks
• History of theft
• History of violence
• History of drug, alcohol abuse
• Employee reckless driving record
• Falsification of credentials: licenses, employment, education, certifications
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Risks of Not Performing Background Checks (Cont’d)
• Risk of suit for negligent hiring
• What is the duty of care in hiring?
• Robinson Worldwide – negligent hiring might even apply to engagement of independent contractors
Written summary: http://www.nfib.com/RobinsonWorldwide
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I. Risks of Not Performing Background Checks
II. Types Of Background Checks
III. Disclosure and Release
IV. Limitations On Utility Of Background Data
V. Lawsuit Risks For Performing Background Checks
VI. Bill: Equal Employment For All Act (HR 3149)
VII. State Legislative Activity
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Types of Background Checks
• Credit check
• Criminal background
• Check references at prior jobs, education
See summary of Lakeview: http://www.nfib.com/lakeview
• Look for independent verification of jobs, education
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I. Risks of Not Performing Background Checks
II. Types Of Background Checks
III. Disclosure and Release
IV. Limitations On Utility Of Background Data
V. Lawsuit Risks For Performing Background Checks
VI. Bill: Equal Employment For All Act (HR 3149)
VII. State Legislative Activity
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Disclosure and Release
• Fair Credit Reporting Act governs employer activity, not just credit lenders
• Prior to seeking criminal or credit background data, always: – Fully disclose, in a document
solely for this notice – obtain applicant or
employee release – Separate form, not just on
application, per FCRA
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I. Risks of Not Performing Background Checks
II. Types Of Background Checks
III. Disclosure and Release
IV. Limitations On Utility Of Background Data
V. Lawsuit Risks For Performing Background Checks
VI. Bill: Equal Employment For All Act (HR 3149)
VII. State Legislative Activity
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Limits on Use of Background Data
• Fair Credit Reporting Act: – Applies to small businesses too – If employer takes adverse action:
• A copy of the consumer report • Contact info for the credit reporting agency • Notify employee of his right to obtain a copy of the report, and
his “Summary of Your Rights” by the FTC • Notify applicant/employee if taking adverse action based on
negative results – and his right to dispute its accuracy
– Seek only timely information (7 years for non criminal data from credit reporting agency
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Limits on Use of Background Data
• For credit background:
– Must be a job related necessity
– Bankruptcy information should be disregarded
– Employers usually may not rely upon single garnishments
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Limits on Use of Background Data
• For criminal background: – No federal prohibition, but EEOC takes great interest
– Use of conviction records preferred, not arrest records
– Focus upon job relatedness (such as cash management, access to financial data, contractual requirement)
– Focus upon the seriousness of the crime and the time elapsed since it occurred
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I. Risks of Not Performing Background Checks
II. Types Of Background Checks
III. Disclosure and Release
IV. Limitations On Utility Of Background Data
V. Lawsuit Risks For Performing Background Checks
VI. Bill: Equal Employment For All Act (HR 3149)
VII. State Legislative Activity
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Risks in Performing Background Checks
• FTC fines for violating FCRA
• EEOC enforcement action for disparate impact
– Ex.: EEOC v. Kaplan Higher Educ. (2010), Kaplan rejected applicants with poor credit history. EEOC: not job related or a business necessity.
• Private plaintiff suits
– Ex.: Arroyo v. Accenture, Hudson v. First Transit, Inc., Mays v. Burlington Northern & Santa Fe RR.
– See summary of Pacific Bell: http://www.nfib.com/PacificBell
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I. Risks of Not Performing Background Checks II. Types Of Background Checks III. Disclosure and Release IV. Limitations On Utility Of Background Data V. Lawsuit Risks For Performing Background Checks VI. Bill: Equal Employment For All Act (HR 3149) VII. State Legislative Activity
Participate on Twitter: Follow @nfiblive and use hashtag #nfiblive
Download slides at: http://www.nfib.com/backgroundcheck
Equal Employment for All Act
• HR 3149, sponsored by Rep. S. Cohen (D – Tenn.), 56 cosponsors
• Proposes to: – Amend the FCRA – Prohibit employers from using a consumer report or
investigative consumer report for employment purposes or for taking an adverse action if:
– The info bears upon creditworthiness, credit standing, or credit capacity
– Exception for: national security, FDIC clearance, state or local government agency requirement, or in a supervisory, managerial, professional position at a financial institution
– Exception when otherwise required by law – Does not exempt other industries.
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I. Risks of Not Performing Background Checks
II. Types Of Background Checks
III. Disclosure and Release
IV. Limitations On Utility Of Background Data
V. Lawsuit Risks For Performing Background Checks
VI. EEOC Position On Background Checks
VII. State Legislative Activity
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State Legislative Activity
• 18 states have either proposed or already have legislation limiting employers from performing background checks.
• California: passed and vetoed • Maryland, D.C., Va.: brought to vote,
did not pass. • Illinois & Oregon: passed
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Questions and Answers
Manesh K. Rath KELLER AND HECKMAN LLP 1001 G Street, NW, Ste. 500W Washington, D.C. 20001 (202) 434-4182 [email protected]
Feel free to call with additional questions!
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Additional NFIB.com Resources
• Hiring Part I: Conducting Background Checks
http://www.nfib.com/press-media/press-media-item/Default.aspx?cmsid=46925
• Pre-Screen Employees Using the Internet http://www.nfib.com/business-resources/business-resources-item?cmsid=46812
• Dos and Don't of Checking Employee References http://www.nfib.com/business-resources/business-resources-item?cmsid=49818
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Download slides at: http://www.nfib.com/backgroundcheck
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